United Trust Bank (UTB) has completed a £35.5m bridge-to-investment facility secured against a new £51.1m GDV mixed-use build-to-rent (BTR) development in South-West London.
The five-year facility, provided by UTB’s Structured Property Finance team, enabled the experienced developers, Dominus New Homes, to refinance their existing development loan and release equity from the scheme as it approached practical completion.
The development, known as Wandle Place, comprises 96 BTR apartments and approximately 9,000 sq.ft. of commercial space in the popular and well-connected London suburb of Earlsfield. The scheme has already attracted strong rental demand, with tenancies agreed on nearly half of the apartments within seven weeks of marketing. Dominus New Homes has considerable experience in the BTR sector and has successfully delivered more than 2,000 homes.
The opportunity was introduced to UTB’s Martin Cameron by Stan Lersch, founder of Property Finance Services acting for Dominus New Homes.
Deal highlights
Loan size – £35.5m
Development GDV – £51.1m
LTV – 70%
Term – 5 years with stepped down rate once agreed ICR achieved
UTB structured the £35.5m facility at 70% loan-to-value (LTV), providing the borrowers with funding certainty through the initial letting period and into the investment phase.
The bespoke facility includes a reduction in the lending margin once rental income has stabilised and an agreed interest cover ratio (ICR) has been achieved. This is expected within three to six months of practical completion and allows the borrowers to benefit from more competitive funding costs as the development becomes established.
The transaction demonstrates UTB’s appetite for substantial lending opportunities across the living sector and its ability to structure facilities which support developers through the transition from construction to income-producing investment assets.
Chris Mason, Director of Dominus New Homes, commented: “Our business model has always been to build for sale, but current poor demand to buy new flats in London required a rental approach this time, together with an investment loan to repay our development finance on time. After all the hard work involved in bringing a development of this scale to completion, it’s particularly rewarding to see such a quick and positive response from prospective tenants.
“With UTB’s funding in place, we can concentrate on getting the remaining apartments let, welcoming our first residents and making this a development people will be delighted to call home.”
Stan Lersch, Founder of Property Finance Services, said: “Dominus New Homes have an outstanding track record in residential development and have delivered another high-quality scheme. With the development nearing completion, the priority was to secure a funding solution which would refinance the existing facility, release some equity and provide long-term certainty without the need for another refinancing exercise in a few months’ time.
“UTB understood exactly what we were trying to achieve and came back with a well-structured proposal which worked for the clients both immediately and over the longer term.”
Martin Cameron, Business Development Director – Structured Property Finance, United Trust Bank, said: “Build-to-rent is an increasingly important part of the UK residential property market, and developers need funding partners who understand that completing a scheme is only one stage of the investment journey.
“At £35.5m, this is a substantial commitment to a new UTB customer, and a good example of how our Structured Property Finance team can provide flexible, commercially attractive funding for larger and more complex property transactions.”
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